Eastar Jet Revived... Court Approves Rehabilitation Plan (Comprehensive)

82.04% of Creditors Approve Rehabilitation Plan
Flight Operations Planned for Early Next Year After AOC Reacquisition

[Asia Economy Reporter Dongwoo Lee] Eastar Jet has obtained approval for its rehabilitation plan from the court after securing the consent of its creditors. With the rehabilitation plan approved nine months after Eastar Jet entered court receivership, the pace of business normalization is expected to accelerate.

According to industry sources on the 12th, the Seoul Rehabilitation Court's Rehabilitation Division 1 held a creditors' meeting at 2 p.m. in Courtroom No. 1 at the Seoul Rehabilitation Court in Seocho-dong, Seoul, and decided to approve Eastar Jet's rehabilitation plan.

At the creditors' meeting, 82.04% of the rehabilitation creditors voted in favor of the plan, meeting the approval requirement of at least two-thirds. To receive court approval for a rehabilitation plan, consent from at least two-thirds of the creditors is required.

The court explained, "The revised rehabilitation plan in this case is recognized as meeting the requirements for approval of a rehabilitation plan as stipulated in Article 243, Paragraph 1 of the Debtor Rehabilitation and Bankruptcy Act."

Eastar Jet entered corporate rehabilitation proceedings in February this year. Due to the prolonged downturn in the aviation industry caused by the COVID-19 pandemic and the failure to find a buyer, Eastar Jet signed a conditional investment contract with Seongjeong, a golf course management and real estate leasing company, in May, rekindling hopes for normalization.

The Ssangbangwool Group (Gwangrim Consortium) participated in the final bid to acquire Eastar Jet, but Seongjeong exercised the priority acquisition right and was selected as the final acquirer.

Eastar Jet signed an M&A investment contract with Seongjeong on June 24 and submitted the rehabilitation plan to the court in September.

There were twists and turns during the creditor and debt adjustment process. When the lessors demanded that Seongjeong pay lease fees for the contracted period even if the aircraft were returned, Seongjeong responded strongly, even mentioning the possibility of withdrawing from the acquisition.

Negotiations progressed as the lessors eventually accepted Eastar Jet's position. Most lessors agreed on the debt amount with Eastar Jet. Consequently, Seongjeong paid the remaining acquisition payment of 63 billion KRW as scheduled on the 5th of this month.

It is analyzed that Eastar Jet was able to secure creditor approval for the rehabilitation plan at the creditors' meeting by reaching an agreement with major creditors, the lessors, on the debt scale.

Eastar Jet reduced the total rehabilitation debt to be repaid from the original 420 billion KRW to about 330 billion KRW, raising the repayment ratio of rehabilitation debt from 3.68% to the 4.5% range.

Eastar Jet plans to use the remaining 15.8 billion KRW for rehabilitation debt repayment after settling public claims from the 70 billion KRW acquisition payment.

Eastar Jet plans to resume operations as early as the beginning of next year after obtaining an Air Operator Certificate (AOC) for international air transport business from the Ministry of Land, Infrastructure and Transport.

This content was produced with the assistance of AI translation services.